Best Derivative Brokers for 2024
Dom Farnell
Co-Founder
Dom, a Co-Founder at TIC, is an avid investor and experienced blogger who specialises in financial markets and wealth management. He strives to help people make smart investment decisions through clear and engaging content.
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Quick Answer: The 7 Best Derivative Brokers are…
- Plus500 – User-friendly platform, competitive spreads.
- Interactive Brokers – Advanced tools, low trading costs.
- IG – Comprehensive market access, reliable execution.
- eToro – Innovative social trading, diverse assets.
- Saxo – Professional-grade platform, extensive features.
- Spreadex – Flexible trading, tailored risk management.
- XTB – Comprehensive tools, transparent pricing.
How Do the Top Derivative Brokers Compare in 2024?
| Broker | Regulatory Authority | Assets Available | Fees | User Friendliness | Advanced Tools | Market Access | Professional Features | Educational Resources | Risk Management | Overall Score (out of 10) |
|---|---|---|---|---|---|---|---|---|---|---|
| Plus500 | FCA (UK), ASIC (Australia), CySEC (Cyprus) | Forex, CFDs on indices, commodities, shares | Competitive spreads | 9 | 7 | 8 | 7 | 7 | 8 | 9 |
| Interactive Brokers | SEC (US), FCA (UK), ASIC (Australia) | Stocks, options, futures, forex, bonds, funds | Low commissions, tiered fees | 8 | 9 | 9 | 9 | 8 | 9 | 9 |
| IG | FCA (UK), ASIC (Australia), CFTC (US) | Forex, CFDs on indices, commodities, shares | Competitive spreads | 8 | 8 | 9 | 8 | 8 | 8 | 8.5 |
| eToro | FCA (UK), ASIC (Australia), CySEC (Cyprus) | Stocks, ETFs, forex, commodities | Commission-free (some fees apply) | 9 | 7 | 8 | 7 | 7 | 7 | 8 |
| Saxo | FCA (UK), ASIC (Australia), MAS (Singapore) | Forex, CFDs on indices, commodities, shares, options, futures | Competitive spreads | 8 | 9 | 9 | 9 | 8 | 9 | 8 |
| Spreadex | FCA (UK) | CFDs on indices, commodities, shares, forex | Competitive spreads | 8 | 7 | 7 | 7 | 7 | 8 | 7.5 |
| XTB | FCA (UK), CySEC (Cyprus) | Forex, CFDs on indices, commodities, shares | Competitive spreads | 8 | 8 | 8 | 8 | 8 | 8 | 7.5 |
When comparing derivative brokers, it’s crucial to consider key features like platform usability, trading tools, market access, and the fee structure. Having traded derivatives myself, I know that the right broker can significantly impact your trading experience and success. Let’s dive into a quick comparison to help you make an informed decision.
Each broker brings something unique to the table. For instance, Plus500’s demo account is great for beginners due to its simple interface and competitive spreads. On the other hand, Interactive Brokers and Saxo cater to more experienced traders with advanced tools and global market access.
Which Broker Offers the Best Trading Experience?
From my personal trading experience, the “best” trading experience depends on your individual needs and trading style:
- For Beginners: Plus500 and eToro are excellent starting points. They offer user-friendly platforms, easy-to-understand tools, and educational resources that can help you get started without feeling overwhelmed. eToro also offers the unique advantage of social trading, which can be incredibly insightful for new traders looking to learn from more experienced investors.
- For Experienced Traders: If you’re an advanced trader looking for a comprehensive suite of tools and a variety of markets, Interactive Brokers and Saxo are top choices. Interactive Brokers offers advanced charting, a wide range of order types, and API integration for automated trading. Meanwhile, Saxo provides a professional-grade platform with extensive research and in-depth market analysis.
- For Variety and Flexibility: IG and XTB strike a balance between usability and professional features. IG offers an intuitive platform with powerful analysis tools and a broad market range, making it versatile for different trading strategies. XTB is known for its transparent pricing and comprehensive tools, providing a solid experience for both intermediate and advanced traders.
- For Niche Market Access and Risk Management: Spreadex is unique in its offering of tailored risk management tools and access to niche markets. If you’re looking for more flexibility and want to explore markets that other brokers might not offer, Spreadex could be the right fit.
In conclusion, the best trading experience is subjective and depends on what you prioritize—whether it’s low fees, advanced tools, user-friendly platforms, or access to specific markets. Understanding your trading needs and goals will guide you to the broker that best suits your strategy in 2024.
What Should You Look for in a Derivative Broker?
Choosing the right derivative broker is crucial for your trading success. As someone who has navigated the markets for years, I’ve learned that certain factors can make or break your trading experience. Let’s explore the key aspects you should consider when selecting a broker.
Regulation and safety should be at the top of your list when choosing a broker. Trading derivatives is inherently risky, and you want to ensure that your broker operates in a secure and regulated environment. Here’s why regulation matters:
- Protection of Funds: Regulated brokers, especially those overseen by reputable authorities like the Financial Conduct Authority (FCA) in the UK, are required to keep client funds in segregated accounts. This means your money is kept separate from the broker’s operational funds, reducing the risk of losing your capital if the broker faces financial trouble.
- Transparency and Fairness: Regulatory bodies enforce strict rules on brokers to ensure they operate transparently and fairly. This includes providing clear information about fees, maintaining adequate capital reserves, and implementing policies to protect clients from fraud.
- Investor Compensation Schemes: In the UK, FCA-regulated brokers are part of compensation schemes like the Financial Services Compensation Scheme (FSCS), which can protect your funds up to a certain amount if the broker goes bankrupt.
As a trader, knowing your broker is regulated provides peace of mind and allows you to focus on your trading strategies rather than worrying about the safety of your funds.
The platform you choose can significantly impact your trading efficiency and overall experience. Here are some platform features to consider:
- Ease of Use: A user-friendly platform is essential, especially if you’re a beginner. Plus500 and eToro are known for their intuitive interfaces that make it easy to navigate the markets and place trades without feeling overwhelmed.
- Advanced Trading Tools: If you’re an experienced trader, you’ll benefit from advanced tools like those offered by Interactive Brokers and Saxo. These platforms provide comprehensive charting tools, technical indicators, and automated trading capabilities that allow you to execute complex strategies with precision.
- Order Execution and Speed: In the fast-paced world of derivative trading, execution speed is critical. A reliable platform with quick order execution minimizes slippage and ensures you enter and exit trades at your desired price. IG and XTB are recognized for their reliable execution and stable platforms.
- Mobile Trading: Having access to a responsive mobile app can make a big difference if you need to manage trades on the go. Most top brokers, including IG and Interactive Brokers, offer robust mobile platforms with nearly all the features of their desktop counterparts.
The right platform can enhance your trading experience, offering the tools and functionalities that match your trading style and strategy.
Understanding the fee structure is essential for maximizing your profitability. Here’s a breakdown of the common fees and costs you may encounter with derivative brokers:
- Spreads: This is the difference between the buying and selling price of a derivative. Brokers like Plus500 and XTB offer competitive spreads, which can help lower your overall trading costs, especially if you trade frequently.
- Commissions: Some brokers, such as Interactive Brokers and Saxo, charge a commission per trade. While this may seem like a drawback, these brokers often offer tighter spreads, which can offset the commission costs for high-volume traders.
- Overnight Fees (Swap Rates): If you hold positions overnight, you may incur overnight financing fees. These fees are typically calculated based on the leveraged amount and the broker’s specific rate.
- Inactivity Fees: Some brokers charge an inactivity fee if you don’t trade for a specified period. It’s important to be aware of this if you’re not planning to trade regularly. For example, eToro implements an inactivity fee after 12 months of no trading activity.
- Deposit and Withdrawal Fees: While most brokers offer free deposits, withdrawal fees can vary. Always check the broker’s policy on deposits and withdrawals to avoid unexpected charges.
A transparent fee structure is a hallmark of a trustworthy broker. Make sure to review all potential costs before committing to a broker to ensure it aligns with your trading budget and strategy.
Which Are the Top 7 Derivative Brokers for 2024?
Why Is Plus500 a Top Choice?
Plus500 has made a name for itself as a user-friendly platform with a straightforward approach to trading derivatives.
CFDs are complex instruments with a high risk of losing money rapidly due to leverage. 80% of retail CFD accounts lose money when trading CFD’s with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
What Are the Unique Features of Plus500?
- Simplicity: The platform is designed with simplicity in mind, making it easy for beginners to start trading with their demo account. It provides a clean interface with intuitive navigation.
- Risk Management Tools: Plus500 offers built-in risk management features such as stop-loss, take-profit, and guaranteed stop orders to help you manage your risk more effectively.
- Wide Range of Markets: Access to a variety of derivative markets including indices, commodities and forex.
How Does Plus500 Handle Fees and Commissions?
- Spread-Based Pricing: Plus500 operates on a spread-only pricing model, meaning there are no commissions on trades. This can be advantageous for those who want a transparent and straightforward cost structure.
- No Deposit or Withdrawal Fees: Plus500 does not charge fees for deposits or withdrawals, which helps keep your trading costs low.
- Overnight and Inactivity Fees: While there are no commissions, be aware of overnight fees for leveraged positions and inactivity fees if you don’t trade for an extended period.
TIC Score 4.6/5
What Sets Interactive Brokers Apart?
Interactive Brokers is well-regarded for its advanced trading tools and global market access, making it a favourite among professional traders.
The inclusion of Interactive Brokers’ (IBKR) name, logo or weblinks is present pursuant to an advertising
arrangement only. IBKR is not a contributor, reviewer, provider or sponsor of content published on this site, and
is not responsible for the accuracy of any products or services discussed.
What Tools and Resources Does Interactive Brokers Offer?
- Trader Workstation (TWS): This powerful platform offers advanced charting, a wide range of order types, and the ability to trade directly from charts.
- API Integration: For those interested in algorithmic trading, Interactive Brokers offers API access, allowing you to implement custom trading strategies.
- Extensive Research: Access to a wealth of research and analysis tools, including market data, analyst reports, and news feeds.
How Competitive Are Interactive Brokers’ Fees?
- Low Commissions: Interactive Brokers is known for its low commission rates, which can be especially beneficial for high-frequency traders.
- Volume Discounts: Offers tiered pricing where fees decrease as your trading volume increases, making it cost-effective for active traders.
- Transparent Fee Structure: Their pricing is transparent, with no hidden fees, and they provide detailed reports on all your trades and associated costs.
What Makes IG a Reliable Broker?
IG is one of the most well-established brokers in the industry, known for its reliability and comprehensive market access.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
How User-Friendly Is the IG Platform?
- Intuitive Interface: IG offers a user-friendly platform with customizable layouts and a range of technical analysis tools. It’s suitable for both beginners and advanced traders.
- Advanced Charting: The platform provides advanced charting capabilities with multiple indicators and drawing tools, allowing for detailed market analysis.
- Mobile Trading: IG’s mobile app is robust, offering full functionality for trading on the go, including access to charts and account management features.
What Are the Trading Costs with IG?
- Competitive Spreads: IG offers tight spreads across a wide range of markets. While they do not charge commissions on most derivative trades, the cost is included in the spread.
- Inactivity Fee: There is an inactivity fee if your account is dormant for a period of time, so it’s something to keep in mind if you plan to trade infrequently.
- Transparent Pricing: IG provides a clear fee structure with no hidden costs, and you can easily access a breakdown of fees before you start trading.
How Does eToro Cater to Traders?
eToro is known for its innovative approach to trading, particularly with its social trading features.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
What Unique Features Does eToro Provide?
- Social Trading: eToro’s standout feature is its social trading platform, which allows you to follow and copy the trades of experienced investors. This is particularly useful for beginners looking to learn from the strategies of others.
- CopyTrader™: The CopyTrader feature enables you to automatically replicate the trading actions of top traders on the platform.
- Diverse Asset Range: Offers a variety of derivatives, including CFDs on stocks, commodities, indices, and cryptocurrencies.
How Transparent Are eToro’s Fees?
- No Commissions on Stocks: eToro offers commission-free trading on stocks and ETFs, which is beneficial for cost-conscious traders.
- Spread Costs: The primary cost of trading on eToro is the spread. While not the tightest in the market, it is competitive given the platform’s unique features.
- Overnight and Withdrawal Fees: Be aware of overnight fees on leveraged positions and a small fee on withdrawals.
Is Saxo Suitable for Professional Traders?
Saxo offers a professional-grade trading experience with a wide array of advanced features and tools.
64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
What Advanced Features Does Saxo Offer?
- SaxoTraderGO and SaxoTraderPRO: These platforms provide an advanced trading experience with professional-level tools, including customizable workspaces, advanced charting, and in-depth market analysis.
- Extensive Market Access: Saxo gives you access to a broad range of derivative markets, including options, futures, and CFDs across various asset classes.
- In-Depth Research: Offers comprehensive research and analysis tools, including real-time market data, news, and expert insights.
How Does Saxo's Pricing Structure Work?
- Volume-Based Pricing: Saxo uses a volume-based pricing model, offering lower fees for higher trading volumes. This can be advantageous for active traders.
- Competitive Spreads: Provides tight spreads, especially on major markets, making it cost-effective for traders who require precision.
- Transparency: Saxo is transparent with its pricing and offers detailed information on spreads and commissions on its website.
TIC Score 4/5
Why Consider Spreadex for Derivative Trading?
Spreadex stands out for its flexibility and tailored risk management options, appealing to a diverse range of traders.
82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
What Makes Spreadex Stand Out?
- Flexible Trading Options: Spreadex offers a wide range of trading options, including spread betting and CFDs. This flexibility allows traders to choose the product that best fits their strategy.
- Tailored Risk Management: Provides a variety of risk management tools, including guaranteed stop orders, which can help protect against market volatility.
- Unique Markets: Spreadex offers access to niche markets that you might not find on other platforms, providing unique trading opportunities.
How Does Spreadex Handle Fees?
- Spread-Based Costs: Spreadex primarily charges through the spread, which is competitive across a variety of markets.
- No Commissions: For most markets, Spreadex does not charge commissions, which can help keep your trading costs low.
- Transparency: The platform is upfront about its fees, and you can easily see the costs involved before placing a trade.
TIC Score 4/5
How Does XTB Compete in the Market?
XTB offers a comprehensive trading experience with an intuitive platform and a transparent pricing structure.
81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
What Trading Tools Does XTB Provide?
- xStation 5 Platform: XTB’s proprietary platform, xStation 5, is known for its speed and reliability. It offers advanced charting tools, technical analysis, and a built-in trading calculator.
- Comprehensive Market Analysis: The platform provides extensive market analysis, including real-time news, market sentiment, and detailed reports, aiding traders in making informed decisions.
- Educational Resources: XTB offers a range of educational resources, including webinars, courses, and a trading academy, making it suitable for traders of all levels.
How Does XTB Manage Fees and Spreads?
- Low Spreads: XTB offers competitive spreads, especially on major markets. The low-cost structure makes it an attractive choice for cost-conscious traders.
- No Commissions on CFDs: XTB does not charge commissions on CFD trades, as the cost is included in the spread.
- Transparent Fee Policy: XTB is transparent with its pricing, with no hidden fees, and provides detailed information on their website.
How Can You Start Trading with These Brokers?
Getting started with derivative trading involves a few straightforward steps, from opening an account to placing your first trade. Whether you’re new to trading or have some experience, here’s how you can begin your journey with these top brokers.
What Are the Basic Steps to Open an Account?
Opening an account with any of these brokers is a relatively simple process. Here’s a step-by-step guide:
- Choose Your Broker: Decide which broker suits your trading style and preferences. For instance, Plus500 and eToro are great for beginners, while Interactive Brokers and Saxo cater more to experienced traders.
- Sign Up: Visit the broker’s website and click on ‘Open Account’ or ‘Sign Up’. You’ll be directed to an online registration form.
- Fill Out the Application: Provide your personal details, including name, address, and contact information. You’ll also need to verify your identity by uploading documents like a passport or driver’s license, and a proof of address, such as a utility bill.
- Complete the Financial Assessment: Some brokers require you to answer a few questions about your trading experience, financial situation, and investment goals. This helps them assess whether their products are suitable for you.
- Verify Your Account: Once your application is submitted, the broker will review and verify your information. This can take anywhere from a few minutes to a couple of days, depending on the broker and your provided documentation.
- Set Up Security Measures: After approval, set up your account’s security features, such as two-factor authentication, to ensure your account is secure.
How to Fund Your Account and Begin Trading
Once your account is set up and verified, the next step is to deposit funds and start trading. Here’s how you can do it:
- Deposit Funds:
- Choose a Payment Method: Most brokers offer various deposit methods including bank transfers, credit/debit cards, and e-wallets like PayPal or Skrill.
- Deposit Process: Log in to your account and navigate to the ‘Deposit’ section. Select your preferred payment method and enter the amount you wish to deposit.
- Processing Time: Deposits via credit/debit cards and e-wallets are usually instant, while bank transfers might take a few days.
- Minimum Deposit: Be aware of the broker’s minimum deposit requirement. For example, Plus500 and eToro have relatively low minimum deposits, making them accessible for new traders.
- Familiarize Yourself with the Platform: Before placing your first trade, take some time to explore the trading platform. Use the demo account if available, like the ones offered by IG and XTB, to practice trading without risking real money.
- Place Your First Trade:
- Select the Market: Choose the derivative market you want to trade. Most platforms have a search bar where you can quickly find assets like indices, commodities, or forex.
- Choose Order Type: Decide on the type of order you want to place—market order (instant execution), limit order (set price), or stop-loss order (risk management).
- Set Position Size and Leverage: Enter the amount you want to trade and set leverage if applicable. Remember, leverage can amplify both profits and losses.
- Execute the Trade: Review your trade details and click ‘Buy’ or ‘Sell’ to execute the order.
- Monitor Your Trade: Keep track of your open positions and manage your trades using the platform’s tools. Most brokers, like Interactive Brokers and Saxo, offer advanced charting and analysis tools to help you make informed decisions.
- Withdraw Profits: If you’ve made a profit and wish to withdraw funds, go to the ‘Withdrawal’ section of the platform. Select your preferred withdrawal method and follow the prompts. Be aware of any withdrawal fees that may apply.
By following these steps, you can easily start trading derivatives with any of the top brokers. Make sure to utilize the educational resources and support offered by these platforms, especially if you’re new to derivative trading, to enhance your trading skills and knowledge.
References:
FAQs
For beginners, the best derivative brokers are typically those that offer user-friendly platforms, educational resources, and low minimum deposits and demo accounts. Plus500 and eToro stand out in this regard:
- Plus500: Offers a straightforward, easy-to-navigate platform with a clean interface. It provides a free demo account to practice trading and get familiar with the platform before using real funds. Plus500 also offers various risk management tools like guaranteed stop orders to help beginners manage their trades effectively.
- eToro: Known for its innovative social trading feature, eToro allows beginners to follow and copy the trades of more experienced investors. This feature can be a great learning tool, providing insights into market strategies and helping newcomers gain confidence. eToro’s platform is also very intuitive and offers a range of educational resources, including webinars and guides.
Choosing the right derivative broker depends on several factors based on your individual trading preferences and goals:
- Trading Experience: If you’re new to trading, look for brokers like Plus500 or eToro that offer user-friendly platforms and educational resources. Experienced traders might prefer brokers like Interactive Brokers or Saxo for their advanced tools and market access.
- Trading Instruments: Consider the range of derivatives offered by the broker. For instance, IG and XTB offer a broad selection of CFDs, options, and futures across various markets including commodities, indices, and forex.
- Fee Structure: Compare the fees and spreads of different brokers. If you’re looking for low-cost trading, XTB offers competitive spreads with no commission on CFDs, while Interactive Brokers provides low commissions, especially for high-volume traders.
- Platform Features: Choose a broker with platform features that match your trading style. For example, if you need advanced charting tools and technical analysis, Saxo and Interactive Brokers are top choices. If you value social trading or copy trading, eToro would be ideal.
- Regulation and Security: Ensure the broker is regulated by reputable authorities such as the FCA in the UK. This ensures that your funds are protected and the broker adheres to industry standards for security and transparency.
- Customer Support: Consider the quality of customer support. IG and Spreadex are known for their responsive and helpful support teams, which can be crucial, especially when you encounter issues or have questions.
By considering these factors, you can choose a broker that aligns with your trading objectives and provides a secure and supportive trading environment.
Yes, you can trade derivatives on a mobile device with most top brokers. Mobile trading apps have become increasingly sophisticated, offering almost the same functionality as their desktop counterparts. Here’s what you can expect from some of the top brokers:
- Plus500: Offers a user-friendly mobile app available on both iOS and Android. It allows you to execute trades, monitor markets, and manage your account on the go. The app is intuitive and includes features like real-time alerts and charts.
- eToro: The eToro mobile app provides full access to its social trading platform, enabling you to follow and copy trades from your mobile device. It’s designed for ease of use, with a clean interface and comprehensive account management features.
- Interactive Brokers: Their mobile app, IBKR Mobile, is highly regarded for its advanced functionality. It includes sophisticated trading tools, research capabilities, and multi-leg options trading. It’s an excellent choice for experienced traders who need advanced tools on the go.
- IG: The IG Trading app offers a seamless trading experience with access to a wide range of markets. It provides real-time charts, news, and an integrated trading platform, allowing you to place and manage trades efficiently.
Mobile trading apps are essential for traders who need to react quickly to market movements and manage their trades wherever they are. When choosing a broker, ensure their mobile app meets your needs in terms of functionality, usability, and reliability.
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